Contact: Allison Matthews
Photo by: Beth Newman Wynn
STARKVILLE, Miss.--"Being rich was fun, but I promise you, I have more joy in my heart today, living an honest life."
Speaking recently to students at Mississippi State, those are among words of advice given by a former top official who became a whistleblower--and served jail time--in a multi-billion dollar fraud at HealthSouth Corp., an Alabama-based Fortune 500 company.
Weston Smith was a recent guest of the university's Richard C. Adkerson School of Accountancy, a part of the College of Business. The theme of his presentation centered on "crossing the line."
Smith told an audience primarily of accounting undergraduates how he once had all the trappings of success, including a high salary, expensive home and many other amenities of a corporate high achiever.
He explained, however, that behind the facade of success, he really was playing a role in a multi-year, multi-billion dollar financial statement fraud. Today, with his assets long ago turned over to the government when the fraud was revealed, he drives a Toyota Tacoma and has a few thousand dollars in the bank.
Since being released in 2007 after serving 14 months of "down time" at a federal prison camp, Smith told the students he hopes to positively influence others by simply sharing his story.
With chances of returning to a "real career" essentially wiped out, he now earns a living speaking to student and community groups about the bad choices he made during the HealthSouth days.
"You never really get past it; the shame of being so stupid and going along with something unethical," Smith said. "You never really get past that, but I kind of have to force myself.
"I'm going to do something good in the form of a warning to others on standing strong in a belief system," he added.
Mark Lehman, MSU associate professor emeritus of accountancy, agreed that Smith's message is the kind of real-life example and warning students should hear as they enter their own careers.
Lehman, who plans the annual spring accounting convocations that included Smith's presentation, said two of the last three speakers have been involved in various sorts of felonies. These personal accounts help illustrate to students how good people can make mistakes that get them involved in fraudulent activity, he explained.
"They need to understand that a trusted person in their organization has the capacity to commit a fraud," Lehman said. "They also need to protect themselves against taking that first small step that could entangle them in a fraud, as well."
Lehman noted that most people seem surprised when they hear a presentation and then get to know someone who has been convicted of financial crimes and other white collar crimes.
"You find out the person is just a very typical individual, and could be the person sitting right next to you," he said. "The person could be your best friend."
During his presentation, Smith also told students that:
--"Things don't start big; things always start small."
--The first time someone breaks their own moral code, they may feel pressure to "go along" or "be a team player." After a second and third compromise, he said the "line" begins to fade and it becomes more difficult to stand up for doing the right thing.
Smith described his affiliation with HealthSouth, which was founded in 1984 by Richard Scrushy. In a dozen years, the company grew to more than 2,000 locations in all 50 states.
All indications pointed to the company's strength and stability, but behind the scenes of the consistent earnings reports, were thousands of journal entries disguising how the company was manipulating financial statements to fraudulently keep up with their own earnings-per-share expectation.
While the discrepancies totaled billions of dollars over time, they were broken up into journal entries that were less than $5,000 each to avoid detection by auditors, Smith said, adding that HealthSouth perpetuated its financial deception by misstating the assets, liabilities, and goodwill of acquired companies.
What commonly begins as something that happens "just this once" and is deferred by saying, "we'll catch up next quarter," or "it's only temporary," quickly snowballs out of control, he said.
"Do you need to turn a blind eye?" he rhetorically asked the students.
"No!" he immediately replied. "You need to keep your eyes open. You constantly have to challenge yourself on what your beliefs are. You have to be strong enough to say, 'No, we're not going to go there.' Are you strong enough in your belief system to walk away from it?"
"I made bad decisions, period," he said.
In a follow-up to his remarks, a student asked Smith how he kept the fraud and the stress from affecting his personal life.
"I didn't," he answered, adding that he lost a very good marriage.
As pressure within the company mounted and his guilty conscience hounded him, he decided to come forward to federal authorities. He met with FBI agents and exposed the entire fraud, accepting responsibility for his own role. All the while, he said he feared the consequences.
"I was scared, but I felt an ability to breathe like I hadn't felt in probably 10 years," Smith said.
HealthSouth's Birmingham headquarters were raided, and the company subsequently was delisted from the New York Stock Exchange. Many innocent people were hurt, Smith said.
While several executives received sentences for their parts in the fraud, CEO Richard Scrushy won a "not guilty" verdict from a Birmingham jury, but currently is serving jail time for a separate bribery conviction. Smith speculated that the verdict might have been different had the trial been held in another city.
For Smith, his grievous mistakes, bad choices, and downright dishonesty are part of his past, but fortunately the lessons he learned the hard way have led to happier times now. He got a round of applause when he told students how he and his wife had remarried in recent months after being divorced for 11 years.
Still, he said he will never get away from one of the worst consequences of his crime -- the never-ending stigma of being a felon.
On the positive side, he concluded by also emphasizing "the joy in knowing there is a second chance in life."
For more information about MSU, visit www.msstate.edu.